finance, macro, trout ice cream etc.

connecting.the.dots began as a news filter for my supervisors at work. Basically, my job was to sift through the junk and pick out the important stuff. This was a bit daunting for a guy still struggling to explain the difference between stocks and bonds.

At first I was thrilled by all the exciting new things I was learning. Poring over the financial news every day was like learning a new language for me. I actually took a print copy of the Wall Street Journal on my first day and highlighted every word I didn’t know so I could look it up later on Google (ps. the paper was glowing).

Somewhere along the way things started to make sense. I was connecting the dots with sharpie instead of pencil. I was connecting more and more dots, and paragraphs started to form.

And then there were images, symbols, memories of movies and pop culture references that somehow seemed appropriate. This giant scattering of dots started to actually look like something…the stories were developing.

And then something funny happened: I started resenting the connection of the dots.

It began around the time I read Thinking, Fast And Slow by Daniel Kahneman, a psychologist cum behavioral economist who has even better things to say about happiness than either psychology or economics. Nearly all of Kahneman’s ideas fit within a “two agent” metaphor which he uses for describing how the mind works. These are System 1 and System 2. He writes:

System 1 operates automatically and quickly, with little or no effort and no sense of voluntary control. System 2 allocates attention to the effortful mental activities that demand it, including complex calculations.

System 1 continuously generates suggestions for System 2: impressions, intuitions, intentions and feelings. If endorsed by System 2, impressions and intuitions turn into beliefs, and impulses turn into voluntary actions.

System 1 is not prone to doubt. It suppresses ambiguity and spontaneously constructs stories that are as coherent as possible…System 1 runs ahead of the facts in constructing a rich image on the basis of scraps of evidence. A machine for jumping to conclusions…will produce a representation of reality that makes too much sense.

Suddenly I was not so thrilled about all of the connecting going on with these dots. I worried that I was spontaneously constructing stories on scraps of evidence in the hopes of producing a quick representation of reality.

I could see connecting.the.dots for what it was: System 1 run amok. The solution, it seemed, was to simply stop drawing lines between the dots. In other words, turn off the noise.

But there is an interesting feature of System 1 that we can’t control:

One further limitation of System 1 is that it cannot be turned off.

And yet System 2 is almost always off. This is for the same reason that we are almost always in a state of physical rest (or at least a slow pace). We don’t like to sprint to work, do jumping jacks up the stairs or push-ups in between meetings because it’s exhausting. Similarly, the mental effort required to constantly check our assumptions about what is happening and why is straight up hard.

When System 1 runs into difficulty, it calls on System 2 to support more detailed and specific processing that may solve the problem of the moment…System 2 is activated when an event is detected that violates the model of the world that System 1 maintains.

The goal, then, is to find a way to encourage System 2, that lazy, thoughtful slob, to get off the couch and tinker with our reality (i.e. put our beliefs and assumptions through the wringer). And this seems to occur only when we observe a violation of the model System 1 has created.

Which brings me to noise cancellation.

How Active Noise Cancellation Technology Works

“Noise, as we know, is a mixture of compression and refraction phases of waves. Active noise cancellation technology creates what is known as antiphase, which is a wave of amplitude similar to that of the outside noise; but with an inverted phase. This antiphase wave, created by the internal circuitry, comes out of the speakers and mixes with the noise…this phenomenon is known as destructive interference…by wearing these headsets, you can have a peaceful sleep in a noisy environment.”

Point: silence (in this case) is not the absence of sound. Noise cancellation may be experienced as if there is an absence of sound, however noise cancellation does not work by subtraction; it works by addition.

In other words, silence is generated. By deliberately introducing an antiphase wave, we can generate silence out of noise.

This dynamic (destructive interference) is essentially what we need to help encourage System 2. When we observe violations (antiphase waves) to the model our System 1 has built, we call on System 2.

System 1 is always on, always listening, always interpreting and always making decisions in the background. It requires no effort. System 2, on the other hand, is intentional, thoughtful, rigorous, deliberate and careful. But it requires effort. It must be turned on in order to reap its benefits.

Once activated, System 2 monitors and challenges the assumptions made by System 1. Activating System 2 can lead to better decision making and, hopefully, peaceful sleep in a noisy environment.

Conclusion

This is what I hope you experienced by reading connecting.the.dots. I hope your System 1 was rattled at least once. I hope you observed at least one antiphase wave that encouraged your System 2 into action. I hope your beliefs and conclusions about markets, economics, asset prices, monetary policy, demographics…the future…

I hope they were tested. Otherwise, I apologize for contributing to the cacophony.

“God knows how any of you can place your vote based on ISS or Glass Lewis,” says JPMorgan CEO Jamie Dimon. “If you do that, you are just irresponsible, I’m sorry. And you probably aren’t a very good investor, either.” Or you probably aren’t in favor of Dimon’s last paycheck: “investors are seeking that a greater portion of executives’ incentive pay be based on performance…Proxy advisers [ISS and Glass Lewis] had recommended investors reject the pay resolution.” Meanwhile, “S&P 500 companies returned a record $242 billion to shareholders in the first three months of the year via buybacks and dividends, surpassing the previous high of $233 billion in the second quarter of 2007…While dividends and buybacks prop up stocks in the near term, they can come at the expense of long-term growth initiatives.” Meanwhile, “productivity has declined in all the major developed economies. This fall is not a mystery, as is often claimed. Poor productivity is a consequence of low investment, and in the UK and the US a major cause of low investment is the incentives created by the bonus culture…Bonuses encourage managers to put more emphasis on the short term for which they are rewarded and pay less attention to the longer-term dangers their companies face…We should therefore expect the rise in short term incentives to have been accompanied by low investment and high profit margins. This is exactly what has happened…Bonuses should be linked to increases in productivity as well as to profit targets.”

α

Here are some things you could know about hedge funds: “the top 11% of managers controlled 92% – or $2.78 trillion — of total hedge fund assets at the end of Q1 2015…Of these top firms, more than 400 managing $1 billion to $4.9 billion collectively controlled $892 billion while 22 managers with $20 billion or more, had $790 billion all together…On average, managers with more than $20 billion were established in 1992.” To which Josh Brown thinks that “if you founded a hedge fund in the early 1990’s, you probably had 100 serious competitors in chasing down the alpha that used to be the lifeblood of the hedge fund game. Cramer was running like a hundred million and he was considered to be a big dog back then…It’s not that hedge fund managers are unskilled — it’s that way too many of them are so highly skilled. This is why alpha is so hard to come by.” Here’s another theory: it’s not that hedge fund managers are unskilled — it’s that way too many passive algorithms are highly skilled: “the middle of the day has become awfully quiet on the U.S. stock market, as index funds and computer models push the action toward the end of the trading day…These include programs that dribble out trades at intervals, known as ‘volume weighted average price’ algorithms. Their proliferation has led volumes to snowball at times when investors are already active, such as at the close…Another factor behind the shift has been the proliferation of passively managed investments…buying or selling a stock at its closing price better aligns their performance with the index they are trying to emulate. Actively managed funds, in contrast, aim to beat, not match, stock indexes.”

“When the big expected thing happens, whenever that is, it will be fully expected, and we should all be able to handle it without much trouble. That’s been the message from a couple of richly credentialed central bankers in the past day or so, as they try to reassure investors that by the time the Federal Reserve starts snugging up interest rates, the move will be well telegraphed and will occur for the right reasons.” Remember: the future is gradual…slow…calm. And far away: “regardless of when the first increase comes, futures show traders don’t see rates exceeding 1 percent by the end of 2016, versus the Fed’s estimate of 1.875 percent.” Furthermore, there is a general belief that “policy makers have consistently overestimated the strength of the economy,” which is fair for GDP, but definitely not fair when it comes to the unemployment rate. Either way, the Fed is “optimistic and hopeful their policies are going to work the way they are intending.” “Pessimists, however, believe the pilot is flying blindly through dense clouds with a faulty radar and constant risk of storms, making the policy normalisation process particularly risky. ‘For me the new thing to look out for is what they do to the portfolio,’” says chief investment officer. In case you forgot, the Fed is still flying with $4 trillion explosives on board. “BlackRock’s Investment Institute pointed out in a recent report that a third of the Fed’s entire Treasury portfolio, about $785bn, comes due by the end of 2018…’Letting these bonds run off represents an additional tightening of monetary policy — a dynamic that may well have greater impact on financial markets than the ending of [zero interest rates] in the short run.’” Meanwhile, Can Your Portfolio Survive Rising Interest Rates? “The average [compound annual growth rate] for the diversified portfolio (30% S&P 500, 30% MSCI EAFE, 40% Barclays Agg) during rate hike cycles has been 8%, which is lower than the overall 12-month return of 9.7% but still quite robust…Of the eight rising rate periods since 1976, there have been zero instances where this diversified portfolio has produced a negative return.” Also, in case you needed a reminder…

“The clever twist is that President Barack Obama has taken boosting infrastructure spending — a favorite policy of Democrats — and tied it to a favorite policy of Republicans — reforming corporate taxes…the president wants a one-time 14 percent tax on these accounts, with the revenue earmarked for infrastructure projects, and to allow the funds to be repatriated to the U.S…the six-year, $478 billion infrastructure upgrade to highways, bridges, and public transit in the U.S. would also replenish the Highway Trust Fund.”

Secular stagnation largely rests on two different stories: First, that we will be making fewer babies forever. Second, that those babies will be crazy un-productive and never raise a cybernetic finger: “Output per worker grew last year at its slowest rate since the millennium, with a slowdown evident in all regions, underscoring how the problem of lower productivity growth is now taking on global proportions…Globally, the rate of growth decelerated to 2.1 per cent in 2014, compared with an annual average of 2.6 per cent between 1996 and 2006…The fact that companies have become less efficient at converting labour, buildings and machines into goods and services is beginning to trouble policy makers around the world.” Also, you should know that number 2 on the Financial Times’ list of five drags on productivity is “The big innovations have already happened.” Which, of course, is always true at all times…the big innovations have already happened. But this will change — will it?! We have just summarized the “debate” on secular stagnation. Meanwhile, George Magnus is connecting the speculative euphoria exhibited by German bunds and Chinese equities: “Rationalised in macroeconomics, this is essentially about ‘secular stagnation’…We should beware this narrative, even if the secular stagnation hypothesis turns out to be right…Any euphoric returns today will be counterbalanced as night follows day…Institutions are still buying European debt on negative yields. Investors who have missed the doubling of the Chinese stock market since mid-2014 wonder if they can afford to stay out. Emerging market currencies are down but asset returns have barely moved despite a steady deterioration in currency reserves, capital flows and growth.” Meanwhile, cheap is like, so 2013: “investors are being dragged kicking and screaming into the stock market because, while valuations are not cheap, there really aren’t any better options,” says money manager. “Higher P/E stocks don’t frighten me…this tends to be the most exciting and rewarding stage of the market anyway,” says fund manager. Meanwhile, Bond Traders Uncover Secret To Rates That Fed Doesn’t Get.

Speaking Of Rewarding Stages Of The Market

How Can I Invest In China? is probably the question you’ll be getting this week (if not already). “A year ago, analysts who cover the 50 largest companies trading in Shanghai and Shenzhen said equities were set to rally 28 percent. Turns out they weren’t anywhere near optimistic enough, as monetary easing and a buying frenzy among Chinese retail investors sent shares surging 111 percent through last week…While regulators have taken steps to weed out speculators, they’ve also sought to expand the role of equity markets in helping companies raise funds as the government reins in credit expansion. Beijing has accelerated reviewing companies’ applications for initial public offerings since April.” Meanwhile, as “the dollar has soared against the currencies of most of its biggest trading partners in the last year, Beijing has largely refused to let the renminbi depreciate against it. At 6.20 to the dollar, it’s less than 1.5% off the record high it posted at the start of last year. As you might expect, tying the renminbi to the dollar has led China’s exporters to lose competitiveness on regional and world markets, particularly against local rivals Korea and Japan.”

“Even though the S&P 500 has closed at an all-time high three times in the last week, investors are still waiting for breadth (i.e. more than just Carl IcahnApple shares moving the market)…the current stretch of 61 trading days without a new high is the fourth longest drought of new highs in breadth for the entire bull market and the longest in nearly three years (December 2013). At 61 days, though, the current drought of new highs in breadth has a ways to go before getting anywhere near the length of the three prior streaks.” Meanwhile, “little conviction may actually be a good thing for stocks going forward…According to AAII, periods of unusually high neutral sentiment are typically followed by outsized returns in the equity market over the next six and 12 months…From 1987 until near the end of 2014, there were 71 instances of unusually high neutral sentiment. Following such periods, the S&P 500 rose 86% of the time and averaged a 7.1% gain.” Meanwhile, David Rosenberg says the current inflation and growth numbers are virtually perfect for stock investors: “In periods where real GDP growth is running between 2% and 3% at the same time that core inflation is between 1% and 2%, the average annual advance in the S&P 500 is 14.4%…Of course, the first-quarter GDP rate was atrocious, and the second quarter is looking weak as well, putting into doubt whether or not the U.S. economy can [produce] even 2% growth for the entire year But don’t fret, according to Mr. Rosenberg’s table, the average S&P 500 advance when GDP falls to the 1% to 2% range slips only to about 13.7%.”

Under The Surface

“There’s a whiff of inflation in the air, thanks to Friday morning’s release of April’s Consumer Price Index (CPI). The core CPI rose 0.3% in April, surprising economists and sending bond yields higher Friday morning…Core CPI is now up 2.6% annualized over the past three months…Is it strong enough to convince the Fed it can safely raise interest rates despite other weak recent economic reports? Probably not, but it does provide some data in that direction. However, the report also shows a 0% gain in real wages, which doesn’t bolster a case for inflation pressure. Also, the year-over-year headline number posted a 0.2% decline.” Meanwhile, “the debt millennials have incurred is a paradox for policymakers: A better educated workforce leads to a more powerful economy, but the rising costs of post-secondary education and inevitable interest rate hikes have created a looming debt trap for borrowers and a potential risk for the taxpayer.” Meanwhile, next Friday we’ll find out if the Atlanta Fed’s GDPNow forecast is worth its salt.

Bank stocks are making a comeback you guys: “with yields expected to keep climbing as the economy improves and as the Fed begins to embark on a multi-year process of policy normalization, the environment for bank stocks is brightening.” You’re probably sitting there thinking “sure, fine — But what inning?!” “We’re only in the fourth inning of credit demand,” says banker. Nice. Meanwhile, foreign exchange rigging is $5.6 billion under the bridge(alt): “the DoJ said that between December 2007 and January 2013, euro-dollar traders at Citi, JPMorgan, Barclays and RBS — who described themselves as members of ‘The Cartel’ — ‘used an exclusive electronic chat room and coded language to manipulate benchmark exchange rates’…the total penalty being paid over forex now exceeds the approximately $9bn paid to settle the Libor rigging claims. The banks settling the forex allegations…are hoping that Wednesday’s deal will enable them to finally draw a line under both affairs.” Meanwhile, “nearly one in five [financial service professionals] feel financial service professionals must sometimes engage in unethical or illegal activity to be successful in the current financial environment.” Also, “the number of people working in the securities business nationally has returned to 2007 levels, as has the gap between the compensation of Wall Street workers and that of everyone else…Average pay per full-time worker in the securities industry averaged 2.2 times that of the average American worker for the 70 years that ended in 1999 and peaked at 4.2 in 2007. It has rebounded to 3.6 times as high in 2013, and looks likely to have risen further since then.” But you guys, “it is unfair to suggest the entire industry is a den of thieves…Structurally, Wall Street firms carry much less risk than they did years ago. Capital requirements are significantly higher.” Indeed. “It might be thought that [diminished liquidity in markets] is an unintended consequence of regulation…But comments from Bank of England Governor Mark Carney last week suggest investors should think again: this may be a feature of the new world, not a glitch…A vital part of this argument is that due to the regulatory overhaul of the financial system, markets have to bear liquidity risk — and should charge to do so…This is difficult for markets to reflect, however…as the assumption of abundant central-bank supplied liquidity has driven down the premium charged for investing in illiquid assets.”

Dear China: We’ll Be The Judge

Here’s something people are really focused on: “The decline of Hanergy Thin Film Solar Group Ltd. was as spectacular and inexplicable as its ascent. Just 24 minutes of Hong Kong trading erased $18.6 billion of market value and wiped out almost four months of gains that made it more valuable than Sony Corp. of Japan.” Apparently the chairman missed the shareholder’s meeting and everything exploded. Bubbles, amIright?!

There’s been an abundance — nay, “cesspool of rotations” ever since the Fed announced the beginning of the end the tapering. “Many were positioned this Jan for US macro liftoff. Once weaker-than-expected Q1 data caused the Fed to ‘blink’ in March, an immediate painful US$ peak, biotech selloff and trough in oil prices ensued.” Remember that? About 6 months ago no one felt like chewing Mario Draghi’s grass? Well: “investor appetite for U.S. stocks has slumped to its lowest level in more than seven years. Though the S&P 500 has hit three new highs in May, the region has suffered its biggest drop in equity allocation since September 2008, with the number of investors overweight U.S. equities declining to a net 19% in May, according to [Merrill Lynch’s] monthly fund manager survey…Only 7% of those questioned cited the U.S. as the region with the most favorable earnings outlook. The vast majority prefer Europe and Japan, where central banks are still committed to quantitative easing programs.” “Not unlike the 1993 comedy ‘Groundhog Day,’…investors are doomed to relive a perpetual daisy chain of mediocre U.S. economic reports and lackluster returns from risky assets…Until (a) the US economy is unambiguously robust enough to allow the Fed to hike and (b) the Fed’s exit from zero rates is seen not to cause a market or macro shock (as it infamously did in 1937-7), the investment backdrop will likely continue to be cursed by mediocre returns, volatile trading rotation, correlation breakdowns and flash crashes.” And Icahnic tweets: “Amidst this light trading volume environment, it does not take much to get markets moving.” For example: the “market-moving impact of Carl Icahn, who tweeted on Monday that Apple is worth $240 a share. That kick-started a rally in [Apple] and, it seems, the entire U.S. stock market…It is surprising to hear so many investors deny the bubbly nature of this market when such moves are now commonplace.” Meanwhile, Tobin’s Q is getting a lot of attention suddenly: “Valuation tools are being dusted off around Wall Street…If you sold every share of every company in the U.S. and used the money to buy up all the factories, machines and inventory, you’d have some cash left over. That (literally) is the math behind a bear case on equities that says prices have outrun reality.” Meanwhile, here are some better questions to be asking yourself. Also, what if everything started to go right in the world economy?

There is a strange amount of taunting going on in financial media right now. Exhibit A: We Dare You To Try Raising Rates This Year. “The market is essentially calling the Fed’s bluff. Traders are betting that policy makers won’t be able to raise rates this year…’In the end, the Fed is more likely to ‘cave’ to the market as opposed to ‘fight it’ by hiking when the market does not have it priced in.’” Exhibit B: Fed Rate Move Will Make Doves Cry. “There are some investors…who don’t think any increase will happen this year. It is this last group — who are likely enamored of sectors paying big dividends, such as utilities and master limited partnerships — the Fed has to worry about…If the Fed does raise rates in September, these folks are going to be surprised — and inflict a few shocks of their own on vulnerable sectors.” But wait…what if it’s all going to be fine you guys? “Think about it: bond yields have spiked over the past two weeks…The stock market, however, hasn’t really been hurt that much as this has been going on.” And “the more people see examples of rising yields and a fairly stable stock market, the more this ‘it’s going to be OK’ idea slips into daily conversations at steakhouses, by water coolers, and at lunches with clients.” Meanwhile, Jesse Livermore (of blogging/Twitter fame, not, like, real life Jesse Livermore fame…that would be weird because real life JL is really dead) has significantly changed his tone on profit margins and I highly recommend reading this entire post but here’s the key point: “dramatic technological changes of the last 20 years have made credible competition in certain key sectors of our economy more difficult, and have allowed dominant [companies] to command sustainably higher profit margins.” He argues that barriers to competition are most pronounced “where the dominant players have pricing power,” e.g. finance, technology and health care. In conclusion, the undead Livermore thinks “bearishly inclined investors should seriously consider the possibility that the ‘mean-reversion’ that they’ve been patiently waiting for is not going to happen, at least not to the extent expected.” Meanwhile CHECK OUT THE GROWTH.

Rising sovereign yields are making some equity investors nervous: “underpinning high share prices are rock bottom interest rates, and once yields climb companies will require stronger earnings growth to support their current valuations…’What has been scary about the last couple of weeks is that rates have been rising without a clear improvement in the economy.’” Speaking of which, producer prices fell by 0.4% in April vs. an expected rise (duh) of 0.2%. “Last month, the volatile trade services component, which mostly reflects profit margins at retailers and wholesalers, fell 0.8 percent after slipping 0.2 percent in the prior month.” ICYMI retail sales weren’t exactly the rate-hike-hero everyone was hoping for: “while April’s payroll employment report put a Fed rate hike back on the table yet again for June, the (weak) retail sales report arguably took it off the table — yet again. That should have been bullish for bonds. Instead, the dollar took a dive on the soft-patch sales report. The weaker dollar lifted the price of precious metals and oil…which also unnerved bonds.” Speaking of which, a weaker dollar is the most crowded trade among lol no i’m kidding…kind of: “with the dollar expected to languish, some traders sank their money into assets that had been flattened by the dollar’s rally,” e.g. oil, euro, EM, sovereign bonds of Russia that kind of stuff. “There is an element of reversal,” is something people are saying. But let’s get back to interest rates: “the US bond yield has been joined at the hip with the German one all year…A 2% bond yield looks attractive for the US 10-year Treasury given the subdued outlook for the Fed’s rate hiking. The problem is that if the German yield gets there, the US yield will be closer to 3%. That would make it even more attractive as long as you didn’t buy the bond at 2%.” Speaking of German yields, “the government bond selloff has been violent indeed, and has had its biggest effect in Europe (see rollercoaster)…the (German) 10-year yield, now around 0.74%, is nearly 15 times higher than its record low, reached on April 20.” But consider this: “euro-denominated corporate bonds have displayed impressive resilience…the yield spread over government bonds has actually narrowed to 1.05 percentage points from 1.12 points on April 20.” Some explanations for this might be that 1) the selloff reflects higher growth and inflation expectations, therefore corporates should benefit from a better economy, or 2) they’ll get theirs. Meanwhile, colleagues at JPMorgan would like you to know about VaR shocks: easy monetary policy has “taken much of the guess work out of interest rates in recent years, causing bond market volatility to collapse. In that environment, [Value at Risk] encourages traders to take on ever large positions. Markets are now heavily populated by VaR-sensitive investors: hedge funds, mutual fund managers, dealers and banks. When volatility ticks up, VaR also prods them to unwind those positions to avoid big losses, causing volatility to spike higher. These movements are further exaggerated by the decline in bond market liquidity…’This volatility induced position cutting becomes self-reinforcing until yields reach a level that induces the participants of VaR-insensitive investors, such as pension funds, insurance companies or households.’”

investors Finally Get What They Wished For Are Rubbing Their Lamps Again

Government bonds are continuing to sell off today: “the US 10-year Treasury yield rose to 2.36 per cent in early New York trading, its highest level since November…Euphoria over the [ECB’s] €60bn-a-month monetary stimulus that pulled the German 10-year bond yield down towards zero per cent last month has faded on improving growth prospects and climbing inflation expectations…’[the sell-off] is starting to stretch the boundaries of what you could call a technical correction. A lot of strategists are getting nervous,’” says a strategist. John Williams, however, thinks nervous is healthy: “my personal preference is that we don’t have the most telegraphed policy decisions in history, as we did in 2004…In a normal economy there is some volatility in markets, that is just a healthy functioning of markets trying to understand and filter what the data means for policy.” Meanwhile, German Bund investors may need to up their intake of aspirin: “It took 102 trading days for 10-year Bund yields to rally from 68bp to their all-time low of 7bp on April 20th. It took just 15 days after that to jump back to 68bp again.” Furthermore, “in the volatility of the last week, the backdrop of negative yielding assets in Europe has changed significantly. Higher yields means fewer negative yields…But even €1 trillion down..negative yielding Eurozone government debt remains greater than the size of positive yielding Euro credit.” Reuters thinks this could be “a shot in the arm” for the ECB: “this has broadened the pool of bonds the ECB can buy under its quantitative easing (QE) purchase programme, which excludes all paper yielding below the minus 20 basis points that corresponds to the bank’s deposit rate.” Meanwhile, “if bond yields are going up because investors demand a higher premium for holding risk, then the losses on riskier assets like equities ought to be bigger still. But that doesn’t appear to be the case. Government bond yields seem to have ticked higher because inflation expectations have been rising…If bond yields are going up because growth expectations are picking up, this should ultimately be favorable for equity markets, albeit after a round of near-term volatility.” Also, the main argument for why this is a “technical” correction has been the surprise announcement by Treasury to issue $64 billion in treasuries this week. However, “demand for the U.S. government securities sold at auction has declined in each of the past three months, after also slumping in the August-through-October 2014 period…the Treasury is also competing with more than $20 billion of debt slated to be sold by companies.” We should get a preview of the “technical” correction thesis today as $24 billion three-year notes go up for auction. Stay tuned.